​Unequal development: What’s the social cost of the BRICS’ economic growth?

After the frantic GDP growth of the past decade in the BRICS (Brazil, Russia, India, China and South Africa) countries, experts are trying to assess how far the benefits of this growth have trickled down to their citizens.

A recent survey, the Social Progress Index (SPI) 2014
of 132 countries shows BRICS nations faring poorly on social
progress.

Except Brazil, 46th on SPI and 57th on per capita GDP, all the
other countries have scored lower on social progress than on
their GDP ranking. Russia has a higher GDP than Brazil (39th) yet
its SPI rank is 80th, while South Africa with a GDP ranking
(58th) is ranked (69th) on SPI.

India (102nd) and China (90th) are the worst
performing BRICS nations, despite their economic growth. The
number of deaths related to air pollution is “flagged as a
cause of concern” for both the countries in the report.

The World Health Organization found acute respiratory infections among the
most common causes of deaths for India’s children. The World Bank
claims 23 percent of deaths among children are due to
environmental factors such as polluted air and contaminated
water.

In China, 1.2 million people die every year due to pollution. The
estimated cost of environmental degradation in China is 9 percent
of its GDP, while it is 5.7 percent of GDP for India.

Wealth is concentrated in the hands of few and public services
such as health and education are privatized, making them too
expensive for millions of poor people and workers to afford.

This has led many to ask if GDP is the best way to measure how
well a country is doing. Can “sustainable growth” be
scoped beyond just the ambit of economics into the broader realm
of social advancement?

“Though the BRICS countries have grown more than 5 percent,
higher than the European Union, their performance in the social
sphere, in the context of the Millennium Development Goals
(MDGs), such as child mortality, access to secondary and tertiary
education, gender equality, basic amenities and environmental
sustainability, have been dismal,” says Amitabh Kundu,
Professor of Economics at the Jawaharlal Nehru University, New
Delhi, who has represented India in many of the BRICS forums and
summits.

Helmut Reisen, who headed research at the OECD Development Center
until 2012 before founding his Berlin-based consulting firm
ShiftingWealth, feels it is the “social deficit” that
threatens sustainability in the BRICS nations more than just the
economic factors.

“First, [the BRICS] are often dual economies with a
productive urban sector and a less productive rural sector,”
Reisen said. “To grow, people shift from rural to urban
sectors. This raises first rural-urban inequality and intra-urban
inequality – the Kuznets effect.”

“Second, the urban middle class is poverty-threatened by
insufficient public services such as local transport, hospitals
and schools. These three services can be provided by the private
sector but at a rising cost,” which creates social exclusion
and dissatisfaction, Reisen said.

Income inequality has been at the source of most of the social
deficits that these countries are facing. According a Credit
Suisse report, wealth inequality in Russia is one of
the world's highest with 35 percent of Russian household wealth
being controlled by just 110 billionaires.

There’s one billionaire for every $11 billion in Russia compared
to one billionaire per $170 billion in the rest of the world, the
study says. The number of billionaires in Russia has increased
13-fold from eight in 2000 to 110 people in 2013.

In an interview with The Guardian, the scientific
director of Moscow’s Higher School of Economics (HSE), former
economics minister Yevgeny Yasin, said that social and economic
inequality is the biggest problem Russia is facing today, with
only 20 percent of Russia’s population successfully participating
in the rise in prosperity.

In China, the Survey and Research Center for China Household
Finance says that 10 percent of households in the country account
for up to 58 percent of the country’s disposable income. The IMF
confirms that income inequality in China has risen more than in
any other Asian economy, and that it is among the world’s top 10
most unequal societies.

The income gap in India manifests itself in the elite education
system, which has created areas of excellence resulting from the
GDP growth, but excludes one in five men and one in three women
due to illiteracy.

The UNDP’s Human Development Report of 2013 ranks India 136th among 187 countries. It
raises concern about the country’s poor Gender Equality Index
with only 10.9 percent of women representation in parliament,
26.6 percent of adult women at higher education, and only 29
percent participating in the labor market.

Despite initiatives like Fome Zero (Zero Hunger) which included financial aid for school-going
children, support for subsistence family farming, microcredit,
aimed at reducing inequality, Brazil remains one of the most
unequal societies in the world with its education and healthcare
systems largely privatized adding costs for households. In fact,
Bolsa Familia (Family Allowance) is among the largest welfare
mechanisms in the world, reaching over 11 million families.

Fabiano Mielniczuk, Former Research Coordinator at the BRICS
Policy Center and current Director of Audiplo: Education and
International Relations, says: “The Brazilian situation is
very complex. On the one hand, (ex-President) Lula’s government
is known as the period in which Brazil was able to tackle all
three dimensions of sustainable development successfully. It
promoted economic growth, reduced carbon dioxide emissions and
distributed income with policies responsible for including more
than 30 million people in the middle classes. On the other hand,
the distribution of economic benefits and other social policies
that granted access to the formal system of education were not
followed by the necessary investments in public transportations,
security in the main urban areas and policies to fight
corruption.”

He adds: “Intricacies of Brazil’s bureaucracy and an
environment marked by corruption hinder their implementation.
After universalizing access to basic education it is necessary to
improve its quality and little has been done in that
regard.”

Referring to the June 2013 protest in Brazil, Mielniczuk said it
was the expression of young adults – economically and
educationally well exposed – for better public services rather
than huge public investments to host the World Cup in 2014.

South Africa is still grossly divided with wealth largely being
concentrated with the white racial group, although the number of
black billionaires and millionaires is also growing. Reforms in
land distribution, minimum wage, public healthcare and education,
initiated during the struggle for democracy, have suffered as a
result of greater tilt towards privatization.

In fact the suppression of urbanization for the country’s black
population during the apartheid era is still rampant. South
African cities continue to be unequal and fragmented, socially
and economically - one side with world-class (private) healthcare
and education, while the other (the majority) struggling with
public schools and hospitals in a sorry state.

Reisen feels that many of these inequalities (rural-urban and
intra-urban) can be counteracted if the government incentivizes
rural development. For this, strong public provision of services
is needed to connect people to job places, health, and better
education – “prerequisites to avoid falling back into
poverty.”

Kundu is calling for a strong social and political mobilization.
Citing the example of democratic elections happening in India he
says, “The country is caste- and creed-ridden. Political
groupings are based on religion and caste. Each constituency has
clear religion and caste-linked vote banks. Given this, political
debates on developmental issues take a backseat.”

However he feels the first-time voters – the 18-23 olds,
comprising about 7 percent of the Indian population, will be the
“change-makers”, rising above caste and religious issues
and demanding a growth-oriented strategy, price stability and
employment generation. On average, an election constituency has
about 90,000 such young voters.

“The entry of the new Aam Admi Party (AAP) into politics is
manifestation of a strong sense of frustration among the youth.
Whether this frustration will be channelized to bring about a
paradigm shift in parliamentary democracy is something is to be
watched,” Kundu says.

A collaborative effort by all the five nations to fight these
social discrepancies is another important step. But Reisen
laments: “The leaders of the BRICS have disappointed in their
endeavor and capacity to articulate their diplomatic and
political joint interest. As an example, the BRICS development
bank – an institution that might help change the international
financial architecture and force more voice for the BRICS – has
still not yet been established.”

What is needed today is greater power in the hands of the most
prevailing force of these nations – the intellectually aware and
informed middle class, and the youth, Kundu says. Both groups are
pro development. These groups should be given a greater share in
the decision-making processes of the nation. Additionally, as the
youngest part of the globe, the BRICS should not let go of the
opportunity to develop youth leadership facilitated by a
world-class education system.

Jhinuk Chowdhury for
RT

Jhinuk Chowdhury is an
India-based former journalist, who currently works as an
independent writer. She can be reached atjhinuk.cchowdhury@gmail.com

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.